Oil rises 1% on concerns about shipping in the Red Sea

Oil prices rose more than $1 a barrel on Tuesday, extending gains from the previous session, after attacks by Yemen’s Iran-aligned Houthi militants on ships in the Red Sea disrupted maritime trade and forced more companies to reroute ships.

Brent crude futures rose $1.28, or 1.6%, to close at $79.23 a barrel, their highest level since Dec. 1. U.S. West Texas Intermediate (WTI) crude futures for January delivery, expiring after Tuesday’s close, rose 97 cents, or 1.3%, to $73.44 a barrel, also the highest high two weeks.

The United States on Tuesday announced the creation of a working group to safeguard Red Sea trade from attacks by Iran-backed Yemeni militants, while the Houthis vowed to defy the US-led naval mission and continue to strike targets Israelis in the region.

“How long it will last is anyone’s guess, which makes the market nervous,” said Fiona Cincotta, senior analyst at City Index. “Despite the operation launched to ensure safe passage through the Red Sea, major shipping companies continue to avoid it.”

Oil prices rose nearly 2% on Monday after a Norwegian-owned ship was attacked and BP said it had halted all transits through the Red Sea. Since then, several other shipowners have made similar announcements.

Approximately 12% of global maritime traffic passes through the Red Sea and the Suez Canal.

Source: Terra

Rose

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